Dunning Management As An Effective Way to Recover Payments

Many analysts opine that subscription is going to be the leading billing model in the future. There are many businesses that you cannot even think that they can run on subscriptions are opting for recurring billing. They are successfully earning through their recurring revenue streams. However, just like any other billing model subscriptions have their own constraints. One of the major stumbling blocks for subscription-based businesses is payment recovery.

 Many subscribers use credit cards to pay their subscription fee and your subscriber can:

  • Reach spending limit of the credit card
  • Lose his credit card
  • Get credit card stolen
  • Have his credit card cancelled

So, you need to communicate with clients regarding payment of the subscription fee and this method of communication for the sake of recovering payments is called dunning. There are dedicated platforms and appropriate ways to communicate with the clients for payments. If you have a smart dunning management plan, it can play a pivotal role in improving customer relationship, increasing payment recovery, and reducing churn. SubscriptionFlow is not only a cloud-based invoicing software but also offers an effective tool for dunning management. The dunning process works in the following manner to help you recover payments.

Dunning Payment Retry

Though banks have provided online transaction facilitation, it is a complex process that involves a trail of events at the back end. Sometimes when a subscription billing system tries to make a transaction for the subscription fee, it fails. There can be a miscellaneous reason for the failure of payment e.g. maintenance of the bank accounts and expiration of credit cards etc. A robust dunning management system as an integrated part of your subscription billing system does not place the user account in the list of unpaid users instantly rather it tries again for the payment recovery after some time.

You can make a payment retry schedule for your subscription business. There can be various payment failure scenarios that you must consider when making the schedule to retry to recover payment.

Timely Notification for the Customer

Effective communication with the customer is the basis of smart dunning. If the transaction fails or in case of any other issue regarding payment for subscriptions, your customer must receive in time notifications about it. Moreover, the language that you use for notifying the customer about the issue with his credit card or bank account must not rebuke or scare him. You should notify as well as pacify customers so as to maintain a good customer relationship because it is always worrisome for people when it comes to money-related problems. With SubscriptionFlow dunning management tools, you can customize and automate dunning notifications as per your business needs.


Brief Call to Action

Suppose there were some issues in the online payment of the subscription fee and you have notified your customer about it through your dunning management software. Now what? Your client must be provided with the solution and you can offer this solution in the form of a call to action. Depending upon the issue you can ask customers to:

  • Update information
  • Add new card
  • Look into the spending limit of the credit card

There can be a lot more options and if you want to reduce churn and want to maintain a long-term customer relationship, customise notifications and do not forget to add a brief and relevant call to action to help your customers regarding their payments.

Follow-Up Dunning Emails

Modern lifestyle keeps people busy and there is a chance that the first dunning email your system sends is ignored by the customer or there can be many other reasons that customers do not respond to these emails. The dunning notification system of many companies stop working here but you need to be better than others. Connect with your customers through dunning emails and remind them more than once about the payment failure through their account. If you offer your customers some time to clear their payments, then mention it in the dunning emails that you send them. Your follow-up dunning emails will not only help you in recovering revenue but will also help the customers to pay for subscriptions timely.

Also Read: Why is Dunning Process More Important during Pandemic and How SaaS Businesses are Recovering Revenue with SubscriptionFlow

Proactive Approach

When you are devising a dunning management plan, you need to have a proactive approach. If the credit card of your customer has got stolen or cancelled then it is obvious that you can do nothing much except you can only notify customers about it. However, when it is the case of credit card expiration, you need to act proactively. You must send dunning emails to your customers beforehand about the credit card expiry dates so that the customer can resolve the matter in time and you get your payments recovered. There are many other occasions when your proactive approach can save you from late payments and churn (in the worst case).

Grace Time for Late Payments

It is an accepted fact that acquiring a customer is costlier and more tiring than retaining the customers. So, you must try your best to retain customers. If a customer fails to pay the subscription fee on time because of payment failure, you can give him some grace time to look into the matters. This way you can make your customers realize that they are important and you can strengthen a lasting customer relationship by offering them grace time to pay the subscription fee. You can define this grace time according to your business requirements.

Reduction in Involuntary Churn

Many businesses invest a lot in analyzing data and they use this analysis to devise policies so as to reduce churn. Do you know dunning management can help you reduce churn? When you communicate effectively with customers for payment recoveries the chances of the operational complexities – a leading cause of involuntary churn – reduce. Ultimately, the rate of cancellation of subscriptions reduces. Methods like customized & automatic dunning notifications and predetermined payment retry schedule play important role in reducing churn.

Also Read: Everything You Need to Know about Dunning Management for SaaS Business and how it can Reduce Churn

If you wish to keep your subscription business evergreen and recover payments in time, you need a robust dunning management software that can perform all functions mentioned above. SubscritionFlow is the cloud-based software that offers not only recurring billing management but also dunning management tools to provide you with a complete package that you need for your subscription-based business. Dunning management helps in tracking the revenue that you lose. You can make policies and plans to recover the money that you lose. If you want to nip the cause of losing revenue because of payment failures, make dunning management part of your subscription billing model from the very beginning.